We consider an agricultural supply chain consisting of a capital‐constrained smallholder farmer and an intermediary platform. The smallholder farmer sells agricultural products through the intermediary platform but lacks financial resources for planting. In addition to traditional bank financing (provided by a bank), the creditworthy intermediary platform can provide loans directly to the farmer (known as direct financing) or serve as a guarantor if the farmer's creditworthiness is insufficient to access bank loans (known as guarantor financing). We show that under guarantor and direct financing, the smallholder farmer's production level can be even higher than that in a centralized system. The farmer prefers direct financing when the production cost is low but the unit commission fee is sufficiently high. Otherwise, he prefers guarantor financing. The intermediary platform will encourage the farmer to resort to bank financing when the farmer's production cost is sufficiently high and the commission fee is low. Otherwise, it will provide direct financing. Guarantor financing makes the platform weakly worse off than direct financing and will be adopted only when the platform is also capital‐constrained. The involvement of the intermediary platform significantly improves the welfare of the farmer and the total profit of the supply chain. Moreover, the increased concern for social responsibility of the intermediary platform can lead to a win‐win‐win outcome for the farmer, the platform, and the whole supply chain.
imchen@ust.hk C onsumers seek for not only base functionalities of products they buy but also fairness in transactions. In this work, we investigate how such fairness-seeking behavior affects a manufacturer's distribution channel structure selection. Specifically, the manufacturer can sell the product directly to consumers (named direct selling) or via a middleman retailer (named agent selling). The manufacturer then decides which distribution channel to adopt with an aim to maximize his profit. Under a newsvendor framework, the distribution channel structure endogenizes the procurement cost and thus impacts consumers' fairness perception and willingness to pay. Interestingly, we show that it may be in the manufacturer's best interest to downward decentralize his distribution channel by adopting agent selling when consumers are extremely fairness-minded. However, when the consumer's fairness concern is weak, direct selling is preferred by the manufacturer. We further show that the above results qualitatively hold when we take into consideration the downstream competition, the dominance of the manufacturer in retail pricing and the heterogeneity of the consumers in their fairness seeking.
I n this study, we investigate a seller's voluntary disclosure strategy when serving two groups of consumers who arrive sequentially and are reference dependent with respect to product quality. Consumers may be naive or sophisticated, depending on whether they can make rational inferences from the seller's disclosure behavior and an experienced consumer's quality review. We show that when consumers are naive, the seller can strategically withhold high-quality information and disclose low-quality information to boost the reference-dependent early adopter's subjective quality review, which in turn enhances the follower's quality expectation and allows the seller to extract more surplus in the second period. However, when consumers are sophisticated, it is difficult for the seller to enhance their quality expectations by designing his disclosure strategy to manipulate the early adopter's quality review. The seller discloses all the quality information to consumers. When the market contains both naive and sophisticated consumers, the seller is able to withhold relatively low-quality information in advance. In such a situation, the seller exclusively serves naive customers in the first period by charging a high retail price. The earlier results are quite robust, regardless of whether the review rating is bounded or whether consumers possess heterogeneous preferences with respect to product quality.
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